Development agreement with possession and power of attorney treated as transfer, so section 54 exemption could not survive.

A development agreement accompanied by possession, fixed consideration, earnest money and a power of attorney authorising the purchaser to deal with the property and construct flats was treated as part performance under section 53A of the Transfer of Property Act, 1882. On that basis, the arrangement fell within the extended definition of transfer under section 2(47)(v) of the Income-tax Act, 1961. Once the transaction was regarded as a transfer, the exemption claimed under section 54 could not continue, and its withdrawal was justified.

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Issues: Whether the development agreement, coupled with possession and power of attorney, constituted a transfer within the meaning of section 2(47)(v) of the Income-tax Act, 1961, and whether the exemption claimed under section 54 was rightly withdrawn.

Analysis: The transaction involved execution of agreements for the properties, fixation of consideration, receipt of earnest money, handing over of possession, and execution of a power of attorney enabling the purchaser to deal with the property and construct flats. These features satisfied the ingredients of part performance contemplated by section 53A of the Transfer of Property Act, 1882, and brought the arrangement within the extended definition of transfer under section 2(47)(v) of the Income-tax Act, 1961. Once the transaction was treated as a transfer, the basis for continuing exemption under section 54 did not survive.

Conclusion: The transaction amounted to a transfer under section 2(47)(v), and withdrawal of exemption under section 54 was justified, against the assessee.

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